Why isn’t this standard procedure again? Most 401k participants aren’t sure how their savings will translate into monthly income and would love to see a retirement income estimate.
It seems obvious. Without knowing, how could someone create a retirement budget? Or confidently exit the workforce, knowing their living expenses will be covered?
Yet new research from LIMRA Secure Retirement Institute (LIMRA SRI) found only about half of workers have gotten their hands on this information.
The study found men are more likely than women to have seen a retirement income estimate (60 percent versus 43 percent), and older workers are more likely than younger employees.
Among retirees, four in 10 respondents said they wish they’d had this knowledge pre-retirement. Female retirees were more likely to feel this way than male (52 percent compared to 33 percent).
Such information becomes ever more useful as employees inch toward their golden years, to be sure, but data show retirement income estimates can positively impact the savings habits of all workers.
Upon seeing an estimate, around one in two workers opted to save more. Somewhat surprisingly, Millennials led the charge—55 percent upped their savings amount.
“In order to help workers prepare for their retirement, financial professionals can make sure they promote income estimates, not just savings totals,” LIMRA SRI advised in its report. “Showing workers their retirement savings as income estimates, financial professionals can help make sure workers are saving enough and confident in their ability to lead the retirement lifestyle they want.”
Data back the confidence-boosting power of the estimate, too. Nearly 70 percent of employees who saw what their income would look like reported feeling confident that they were saving enough to live comfortably and confident that they’d live the retirement lifestyle they desired.
Among workers who hadn’t seen an estimate, just three in 10 felt the same.